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[2014] NSWSC 1275
Supreme Court of NSW
2013-11-22
Hall J
Original judgment source is linked above.
Judgment 1The plaintiff, Alex Simmons, commenced proceedings by way of Statement of Claim against Rockdale City Council ("the Council") filed on 6 February 2008. An Amended Statement of Claim was filed on 23 March 2011 whereby St George Sailing Club Ltd ("the Club") was joined as second defendant to the proceedings. The proceedings related to an accident that occurred on 11 April 2007 whilst the plaintiff was riding his bicycle through a carpark adjacent to the Club and struck a boom gate that had been closed across a motor vehicle entrance to the carpark. The plaintiff's accident resulted in a below knee amputation of his left leg. 2The matter was heard over seven days. On 27 September 2013 I delivered the principal judgment in these proceedings: Simmons v Rockdale City Council [2013] NSWSC 1431. An order was made that verdict and judgment be entered in favour of the plaintiff against the Council in the amount of $928,000 and that judgment be entered in favour of the Club. I granted leave to the parties to make an application in respect of costs of the proceedings and other ancillary orders. 3The proceedings were re-listed on 22 November 2013 for the purposes of hearing the parties on the issues of ancillary orders and costs. 4Written submissions by Mr Campbell SC and Mr Sheller who appeared on behalf of the plaintiff are dated 22 November 2013 and 11 December 2013. I have also had the benefit of written submissions from Mr Watson SC who appeared on behalf of the Council dated 6 December 2013 together with the affidavit of Nina Alexandra Morgan affirmed on 4 December 2013 and the affidavit of John Scott MacLennan affirmed on 1 November 2010. Written submissions were also received from Mr Perla of counsel who appeared on behalf of the Club dated 22 November 2013 and 29 November 2013. 5The issues that remain in dispute between the parties are whether the plaintiff is liable to pay the Club's costs and, if so, whether costs should be awarded on an indemnity basis from the date of the Club's offer of compromise and whether the plaintiff is entitled to a Bullock or Sanderson order in respect of his costs liability to the Club.
Procedural History 6The following procedural matters are noted:
(a) Liability to pay the Club's costs on an indemnity basis 7The plaintiff submitted that as the Club's offer of compromise was made several months prior to the hearing and not repeated, it should be seen as merely a procedural tactic to trigger costs and not a real or genuine offer. The plaintiff contended that the evidence indicated the Club had incurred a minimal amount of costs at the time the offer was made. 8An offer of compromise, it was noted, must be a real and genuine offer: Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368. 9It was submitted that the Club's offer was "an invitation to surrender" in circumstances where:
(b) Bullock or Sanderson Order 13The plaintiff accepted that he is potentially liable to pay the costs of the Club. However, he submitted that if he is found so liable, he should be entitled to a Bullock or Sanderson order from the Council. 14Mr Campbell SC submitted on behalf of the plaintiff: "The Council actively informed us that they had, whether it was formal or informal, delegated the authority to operate the gate to the club." (T 17:45-46) 15Mr Campbell acknowledged that in order to obtain a Bullock or Sanderson order he must demonstrate the following: (1)It was reasonable to join the Club to the proceedings; and (2)There was something in the conduct of the Council that makes it fair or reasonable that it should bear the liability for the costs of the Club. 16In respect of (1) above, the plaintiff submitted it was reasonable for him to sue the Club in circumstances where:
The Council's Submissions 20The Council accepted that it is liable for the costs of both the plaintiff and the Club occasioned by costs thrown away as a result of its amendment to its defence at trial, which resulted in an adjournment of the hearing. 21It, however, opposed the making of a Bullock or Sanderson order on the following bases:
(a) Entitlement to costs on an indemnity basis 33As a consequence of the plaintiff not accepting the offer of compromise dated 7 February 2012, the Club seeks an order that the plaintiff pay its costs of the proceedings on the ordinary basis up to and including 7 February 2012 and on an indemnity basis from 8 February 2012. 34The affidavit of Geoffrey Thomas Connellan affirmed 12 November 2013 was read on the application. 35In its written submissions dated 22 November 2013, the Club submitted that the filing of cross-claims was not a circumstance relevant to the reasonableness of the rejection of the offer, as they were a distinct issue that did not involve the plaintiff. 36The Club further submitted that Mr Walsh's affidavit sworn on 26 October 2010, does not provide a basis upon which the court would determine the plaintiff's rejection of the offer was reasonable and that the ordinary consequence of an offer of compromise should not be applied. 37It was contended that the plaintiff was on notice that the plaintiff was at risk of not succeeding against the Club if further evidence failed to establish a more formal delegation of responsibility in respect of the gate. 38The submission was that the plaintiff cannot establish on any view of the evidence that it was reasonable that he reject the offer, particularly given that by the time the offer was made the plaintiff was well appraised of all the evidence and factual material that was to be put before the Court. 39The Club further noted that the caselaw authorities indicate that despite this, "something more" than acting reasonably must be established in order to displace the usual rules in relation to offers of compromise. The Club submitted this had not been made out on the evidence before the Court. 40In the Club's supplementary submissions on the question of indemnity costs dated 29 November 2013, the Club again argued that the onus was on the plaintiff to justify any departure from the ordinary rules in relation to offers of compromise and that the onus had not been satisfied on the plaintiff's evidence on the present application. 41The Club also replied to the plaintiff's submissions that its offer was not a genuine one. It was submitted that the analysis of Beech-Jones J in Collins v Clarence Valley Council (No 4) [2013] NSWSC 1735 was analogous to the present proceedings: "[5]...In Dean v Stockland Property Management Pty Ltd (No 2) [2010] NSWCA 141 at [14] the Court of Appeal summarised the authorities concerning this proposition so far as they apply to offers of compromise: "An offer of compromise will only justify costs on an indemnity basis if it has a real element of compromise (Leichhardt Municipal Council v Green [2004] NSWCA 341; Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375). An offer which does not involve a real and genuine element of compromise will not be taken into account in relation to costs under the Rules (The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] NSWCA 120; (2006) 67 NSWLR 706). It has been said that indemnity costs will not be granted where the offer of compromise is designed simply to trigger the entitlement: for example, Tickell v Trifleska Pty Ltd (1990) 25 NSWLR 353 at 355 per Rogers CJ Comm D. An offer of compromise will always be intended to trigger the entitlement. The force of 'simply' is the need for a real element of compromise." [6] However simply because a defendant proposes a resolution involving the entry of judgment in their favour with no order as to costs does not necessarily mean that the offer has no real element of compromise (Leichhardt Municipal Council v Green [2004] NSWCA 341 at [30] and [36] per Santow JA, with whom Bryson and Stein JJA agreed). Such a conclusion would be inconsistent with UCPR r 20.26(2). Instead the offer must be considered having regard to the circumstances in which it was made (Leichhardt Municipal Council at [27]). [7] As at 2012 the proceedings had been on foot for two years. Pleadings had been filed and there had been a number of directions hearings. I expect that by that time substantial costs had been incurred by the Council. Further it had pleaded reliance on various provisions of the Civil Liability Act 2002 which represented a formidable hurdle for Dr Collins. Its case would have appeared strong, notwithstanding the poor state of the bridge at the time of Dr Collins' accident. Its offer represented some potential benefit to Dr Collins in terms of avoiding an exposure to a potential liability. In these circumstances, I do not consider its position to be relevantly different to the offer found by Santow JA to be genuine in Leichhardt Municipal Council at [40]." 42The Club also cited the judgment of Basten JA in Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [9]: "There is authority for the proposition that both an offer of compromise under the rules and an informal offer must involve "a real and genuine element of compromise": The Anderson Group Pty Ltd v Tynan Motors Pty Ltd (No 2) [2006] NSWCA 120; 67 NSWLR 706 at [8]. While this terminology is not entirely apposite, it has been described as "serviceable": Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 at [25] (Spigelman CJ, Beazley and McColl JJA). To characterise an offer by reference to epithets such as "real" or "genuine" adds little to the requirement of compromise, and may imply (wrongly) that the appropriate inquiry is as to the subjective intentions of the offeror: Hancock v Arnold; Dodd v Arnold (No 2) [2009] NSWCA 19 at [23] (Ipp, McColl and Basten JJA); Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170 at [17]-[18]. As explained by Giles J in Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 at 368: 'Compromise connotes that a party gives something away. A plaintiff with a strong case, or a plaintiff with a firm belief in the strength of its case, is perfectly entitled to discount its claim by only a dollar, but it does not in any real sense give anything away, and I do not think that it can claim to have placed itself in a more favourable position in relation to costs unless it does so.'" 43It was contended that the Club's offer was distinguishable from cases of "walk-away offers" such as Singh v Singh (No 2) [2004] NSWSC 225 in which the plaintiff was also asked to also bear the defendant's costs to date. 44The Club refuted the plaintiff's suggestion that it had incurred a minimal level of costs at the date of the offer of compromise, resulting from being involved in the proceedings for 11 months as at the date of the offer, which led to reviewing voluminous lay and expert evidence that had been served by the plaintiff and the Council, and drafting and filing various pleadings. 45In respect of whether the plaintiff's rejection of the offer was reasonable, the Club cited the factors enunciated in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298 as factors relevant to determining whether the rejection of an offer is reasonable: "(a) the stage of the proceeding at which the offer was received; (b) the time allowed to the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree's prospects of success, assessed as at the date of the offer; (e) the clarity with which the terms of the offer were expressed; (f) whether the offer foreshadowed an application for an indemnity costs in the event of the offeree's rejecting it." (at [25]) 46The Club addressed each of these elements in turn in its written submissions. I summarise the submissions on each factor as follows: (a)The offer was made seven months prior to the hearing but 11 months after being joined to the proceedings. This was "significantly" after the time the plaintiff had available to him all of the substantive evidence. (b)The offer was open for 28 days in accordance with the Uniform Civil Procedure Rules 2005 ("UCPR"). (c)The compromise was significant as it provided for each party to pay its own costs. This type of compromise is specifically contemplated by UCPR r 20.26(3)(a)(i). (d)As at October 2010 the plaintiff knew that if further evidence to establish there had been a formal delegation of the opening of the gate to the Club was not forthcoming, his claim against the Club may not be maintainable. By the time the offer was made, the plaintiff ought to have been aware that his claim against the Club was liable to fail. This was deposed to in Mr MacLennan's affidavit affirmed 1 November 2010. (e)The plaintiff does not raise any suggestion regarding the clarity of the offer. (f)Although there was no specific foreshadowing of an application for indemnity costs in the offer, it is expressly provided for in the UCPR. The plaintiff ought to be taken as knowing the provisions of the UCPR. 47Accordingly, the Club submitted that its offer was genuine and that the plaintiff acted unreasonably in refusing to accept the offer. The authorities, specifically, Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2), favour a determination that the usual costs consequences should be applied.
Consideration 48Section 98 of the Civil Procedure Act 2005 confers a discretionary power in determining costs. That power, of course, is one to be exercised on a principled basis having regard to all the circumstances of the case.
(1) Whether the Club's costs should be payable on the ordinary or an indemnity basis 49The second defendant sent an Offer of Compromise to the plaintiff on 7 February 2012 which conformed with UCPR r 20.26. 50Accordingly, it was argued that the second defendant was entitled to an award of costs in accordance with UCPR r 42.15A. As at the date the offer was made, r 42.15A was in the following terms: "(1) This rule applies if the offer concerned is made by the defendant, but not accepted by the plaintiff, and the defendant obtains an order or judgment on the claim concerned as favourable to the defendant, or more favourable to the defendant, than the terms of the offer. (2) Unless the court orders otherwise: (a) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, to be assessed on the ordinary basis, up to the time from which the defendant becomes entitled to costs under paragraph (b), and (b) the defendant is entitled to an order against the plaintiff for the defendant's costs in respect of the claim, assessed on an indemnity basis: (i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and (ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made."
(a) Principles 51In accordance with the Uniform Civil Procedure Rules, an offer of compromise creates a prima facie entitlement to indemnity costs, as to which the offeree must establish a basis for some other order: Caine v Lumley General Insurance Ltd (No 2) [2008] NSWCA 109 at [33]. It has been stated that exceptional circumstances are required and it is insufficient merely to show that the offeree acted reasonably in refusing the offer: Nominal Defendant v Hawkins [2011] NSWCA 93 at [56]. 52However, the Court of Appeal in Regency Media Pty Ltd v AAV Australia Pty Ltd [2009] NSWCA 368 considered that: "...Rules 42.14, 42.15 and 42.15A are in different terms. They provide that, when the relevant costs rule is engaged, a party is entitled to indemnity costs from a specified time (usually one day after an offer of compromise is made), "unless the court orders otherwise" (emphasis added). The relevant provisions of these rules do not specify that exceptional circumstances or the avoidance of substantial injustice must be established before the court will make a different order to the prima facie order for which the rules provide and, in our opinion, the rule should not be so construed. Rather, the discretion is one that has to be exercised having regard to all the circumstances of the case." (at [15]) (emphasis added) 53In Sydney Attractions Group Pty Ltd v Frederick Schulman (No 3) [2013] NSWSC 1544, Sackar J at [31] observed: "Although it is suggested in a number of authorities that there must be "exceptional circumstances" before a court may order otherwise, I think the use of that expression in the earlier authorities is simply to recognise that there does exist a general rule providing for indemnity cost consequences, and therefore "the case needs in some way to be exceptional ... because the general rule is that provided for in the rule itself" (Kirby P in Hillier v Sheather at 422). In my view, the words "exceptional circumstances" used in the earlier cases indicate that there must be some reason or ground for a court to make an order departing from the general indemnity cost consequences, but those words do not suggest that the case must be extraordinary, nor do they suggest a particular degree of difficulty in persuading a court to "order otherwise"."
(b) Reasonableness in Not Accepting the Offer of Compromise 54Accordingly, the reasonableness of a party (offeree) refusing an offer remains an important feature in determining whether an order for indemnity costs should be made. The reasonableness must be assessed as at the date of the offer and without the benefit of hindsight: Barakat v Bazdarova [2012] NSWCA 140 at [51]. This matter was also considered by the Court of Appeal in Noon v Bondi Beach Astra Retirement Village Pty Ltd (No 2) [2010] NSWCA 285 at [11]: "The appellants' submissions amounted to little more than that their ultimate success meant that it was unreasonable for the respondents not to have accepted the offer. That is incorrect reasoning. Reasonableness is not to be determined with hindsight; rather, the strength or otherwise of the appellants' claim should be considered prospectively as at the time of the offer (for example, Gretton v Commonwealth of Australia [2007] NSWSC 149 at [24]). A claimant can reasonably seek to have a claim determined in court, although ultimately it fails, rather than accept an offer of much less than that which success would bring." 55As noted earlier, the Victorian Court of Appeal in Hazeldene's Chicken Farm v Victorian WorkCover Authority (No 2) identified six factors relevant to determining whether an offeree has reasonably rejected an offer. These factors have subsequently been endorsed, in particular, by the New South Wales Court of Appeal: See, for example, Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344. 56In accordance with dicta in Regency Media Pty Ltd v AAV Australia Pty Ltd, extracted above, it is essential that regard be had to all the circumstances of the case in determining the issue arising on a claim for indemnity costs, including the failure of a plaintiff to accept an Offer of Compromise. 57As observed above, reference was made in the submissions of the Council and the Club to the fact that the Council had discovered a significant number of documents, including documents relating to the "arrangement" between the Club and the Council concerning the operation of the boom gate. Additionally, by the date of the Offer of Compromise the Council had served evidentiary statements. However, be that as it may, as at the date of the offer the issues concerning the "arrangement", in particular the nature and extent of the Club's responsibility as to the operation of the boom gate, was far from clear. 58In this respect there were two matters to be noted concerning the "arrangement". The first concerns the question as to whether the terms for such an arrangement between the Council and the Club had been clearly established. The second is the "arrangement" in its operation, or what might be referred to as the custom and practice concerning the operation of the gate. 59As to the first, the Council and the Club failed to conclude in any final form the scope, purpose and responsibility of the Club under the "arrangement". The evidence at trial established that the Club failed to reply or respond to Mr Lay's letter relating to the terms for the proposed "arrangement" (see paragraphs [129]-[140] of the principal judgment) and no express or formal agreement was ever concluded in that respect. Hence, as discussed in the principal judgment, a somewhat loose and informal arrangement came into being. As also discussed in the principal judgment, a potentially unsafe system for the boom gate's operation resulted from such an arrangement: see [412]-[414] of the principal judgment. 60The assessment as at the date of the Offer of Compromise as to whether there was a basis upon which the Club could be liable was not, in my opinion, one that fell to be determined, as the submissions for the Council on costs suggest, simply upon the basis that it should have been apparent to the plaintiff's advisers that there had been no formal or actual "delegation" by the Council of its responsibility for the boom gate and its operation. The loose and informal "arrangement" to which I have referred to an extent obscured, rather than made plain, exactly what the Council and the Club had discussed and accepted to be their respective roles and responsibilities, in particular, whether there were separate or shared responsibilities in that respect. 61As to the second of the two matters to which I have referred at [58] above, if there was a "practice" that had come into operation concerning the boom gate, neither the Council's discovered documents nor its evidentiary statements established with specificity its nature or extent save for the fact that prior to the plaintiff's accident, the Club's cleaner usually opened the gate of a morning and that on certain occasions the cleaner had failed to do so. 62The discretion as to the making of an indemnity costs order in favour of the Club requires in its proper exercise and as a matter of fairness to bring to account all the circumstances of the case, including those to which I have referred above: Regency Media Pty Ltd v AAV Australia Pty Ltd, supra. 63Given the lack of clarity on the material available to the plaintiff as to the arrangement between the Council and the Club, I do not consider the plaintiff's failure to accept the Offer of Compromise can be regarded as unreasonable.
(c) No Evidence as to the Amount of the Club's Costs as at the making of the Offer of Compromise 64I turn to the fact that although the Offer of Compromise was made on the basis that the Club offered to pay its own costs, there was no quantification indicated as to what the value or amount of those costs would be at the time of the offer. 65Whilst the Club had, of course, incurred costs up to the date of the making of the offer (a period of approximately 11 months), there is no material as to the likely extent or amount of the costs actually incurred by it in that period. 66Apart from the matters referred to in [11] of the Club's written submissions dated 29 November 2013, and the costs incurred in the plaintiff's application to join the Club as a defendant, there is no evidence of any other interlocutory proceedings between the plaintiff and the Club up to the date of the Offer of Compromise. This is not surprising as the Council had retained and briefed expert witnesses as it was effectively the defendant that took the active or lead role in defence of the proceedings. 67Accordingly, there is no basis upon which any sound assessment can be made as to the likely level of the Club's costs as at the date of the offer. A somewhat similar position arose in Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 concerning a Calderbank offer wherein the Court observed: "5. ... Whilst the Second Respondent had no doubt incurred some costs by 11 January 2005, it is difficult to know whether the sum would have been significant in relation to the costs of the litigation as a whole, or in relation to any possible judgment which the Appellant might obtain, if successful. Either the Appellant's case against the Second Respondent was hopeless and should not have been pursued at all, or it was not. The "Calderbank letter" does not, by itself, justify any variation from the usual order."
(d) Absence of Information to Support the Club's Offer Requiring Capitulation by the Plaintiff 68The evidence established that the Council in opposing the plaintiff's application to join the Club, through its solicitor, had pointed out to the plaintiff's solicitor that, in its assessment, the plaintiff had little prospect of establishing liability in the Club. However, the Offer of Compromise by the Club was not accompanied by any reference to any specific matters relied upon by it which indicated or established that the plaintiff would have difficulty in establishing liability against the Club. In other words, neither the Council nor the Club provided what has been referred to as "a reasoned suggestion of capitulation". In Leichhardt Municipal Council v Green [2004] NSWCA 341, the Council made an offer of settlement in terms of a "verdict in favour of the Council with each party to bear its own costs". Santow JA, at [30], observed: "... The fact of the matter is that the Council was not really compromising its position at all - it maintained it was not liable and that the law clearly justified the rightness of its cause. Its attitude was not one of compromise in the sense of strict give and take, but it was made in a bona fide attitude designed to reach settlement, which accords with the policy of the law in encouraging early termination of litigation. It is certainly arguable that its letter was not a mere demand for capitulation; it was a reasoned suggestion of capitulation which alerted the plaintiff to what the Council saw as the deficiencies in the plaintiff's case. Given the position in which the Council as defendant found itself (see above), it is difficult in the circumstances to conceive what it otherwise could have done by way of affirmative step towards ending litigation (aside from 'buying off' the plaintiff)." (emphasis added) 69In all the circumstances of the case, and taking into account the matters in (a) to (d) above whether considered severally or jointly, I do not consider that the plaintiff acted unreasonably in not accepting the Club's Offer of Compromise within the time specified in the offer. I have accordingly concluded that a proper exercise of the discretion in this case is that the Club's costs should be payable on the ordinary basis.
(2) Whether a Bullock or Sanderson order should be made 70It is well established that a Bullock or Sanderson order should only be made where, in the circumstances, it was reasonable and proper for the plaintiff to join the successful defendant and where there is something in the conduct of the unsuccessful defendant that makes it appropriate to exercise the discretion. 71The High Court considered the principles regarding the making of Bullock or Sanderson orders in Gould v Vaggelas (1985) 157 CLR 215, with Gibbs CJ finding that: "...the mere fact that the joinder of two defendants was reasonable does not mean that the unsuccessful defendant should be ordered to pay, directly or indirectly, the costs of the successful defendant. Obviously a judge should make a Bullock Order only if he considers it just that the costs of the successful defendant should be borne by the unsuccessful defendant, and, if nothing that the unsuccessful defendant has said or done has led the plaintiff to sue the other defendant, who ultimately was held not to be liable, it is difficult to see any reason why the unsuccessful defendant should be required to pay for the plaintiff's error or overcaution." (at 229-230) 72It was further observed by Wilson J (with whom Murphy J agreed on this point) that it is permissible to make such an order "...where the costs in question have been reasonably and properly incurred by the plaintiff and between him and the unsuccessful defendant" (at 247). 73In this respect it was also noted by Brennan J that a Bullock order can be made: "...in an action brought against two or more defendants for substantially the same damages only if the conduct of the unsuccessful defendant in relation to the plaintiff's claim against showed that the joinder of the successful defendant was reasonable and proper to ensure recovery of the damages sought." (at 260) 74These principles were summarised by the Court of Appeal in Stevedoring Industry Finance Committee v Gibson [2000] NSWCA 179, citing Lackersteen v Jones (No 2) (1988) 93 FLR 442, as follows: "1. It must be seen to have been reasonable and proper for the plaintiff to have sued the successful defendant. 2. The causes of action against two or more defendants need not be the same but they must be substantially connected or dependent the one on the other. 3. While it is essential to find that the plaintiff has acted reasonably and properly that alone is not sufficient. The court must find something in the conduct of the unsuccessful defendant which makes it a proper exercise of discretion. 4. Finally, in considering whether to make such an order, the court should, in the exercise of its discretion balance overall two considerations of policy: the first, that an unnecessary multiplicity of actions should not be forced on litigants, so that a plaintiff who acts reasonably in joining two or more defendants should not be penalised or lose the fruits of his victory in costs on the basis that he should have either elected or taken separate actions; secondly, that an unsuccessful defendant should not have to pay more than one set of costs merely because he is unsuccessful." (at [128]) 75This was similarly endorsed by the Court of Appeal in Council of the City of Liverpool v Turano (No 2) [2009] NSWCA 176 at [15]: "In determining whether it is fair to make such an order, two matters are usually considered to be relevant. First, it must have been reasonable for the plaintiff to have brought the proceedings against the successful defendant: see Gould v Vaggelas [1985] HCA 85; (1985) 157 CLR 215 per Gibbs CJ (at 230); Wilson J (Murphy J agreeing) (at 247); Brennan J (at 260); Lackersteen v Jones (No 2) (1988) 93 FLR 442 (at 449); Stevedoring Industry Finance Committee v Gibson [2000] NSWCA 179; (2000) NSWCCR 417 (at [128]) per Mason P (Stein and Heydon JJA agreeing). Secondly, there must be some conduct on the part of the unsuccessful defendant which would make it fair to impose liability on it for the costs of the successful defendant: Gould v Vaggelas (at 230; 247 and 260)."
(a) Was it reasonable for the Plaintiff to sue the successful defendant, the Club? 76In Nominal Defendant v Swift [2007] NSWCA 56 a plaintiff injured in a road accident sued both the council and a nominal defendant. Although the plaintiff was successful against both parties, on appeal the judgment against the council was set aside. Notwithstanding, the Court of Appeal made a Bullock order against the nominal defendant on the basis that: "...the respondent was justified, even prompted, in bringing proceedings against the Council, by reason of the Nominal Defendant denying liability as it did dispute, inter alia, that it was an 'unidentified vehicle'. That action made inevitable the joining of the Council by the respondent." (at [99]) 77The pleaded allegation and the issues at trial involved, as far as the Council and the Club were concerned, two potentially overlapping bases for liability in negligence but which related to the same activities/functions concerning the operation of the boom gate. In other words, whilst there were discrete factual issues peculiar to the position of the Club and that of the Council in relation to the delegation of the boom gate function and its operation, in particular as to the "control" of its operation, knowledge of the daily recreational use of the cycleway, the discretionary basis permitted to the Club as to the opening and closing times for the boom gate, there remained a significant overlap between their respective positions on such matters. In summary, whilst vis-à-vis the Council and the Club there were some relevant factual matters in common, there were also separate aspects concerning each including defences raised by the Council under the Civil Liability Act 2005. 78When consideration is given to the pleaded case against the Council and the Club and the matters to which I have just referred in the previous paragraph, the issue as to whether there was a factual foundation for a finding of breach of duty by the Club was not, as earlier discussed, entirely clear. The plaintiff, in my assessment, was not faced with a situation whereby discovered documents and evidentiary statements indicated that the Club could not have any potential liability. 79In the circumstances I am of the opinion that it was reasonable for the plaintiff to have sued the Club.
(b) The conduct of the unsuccessful defendant, the Council 80In respect of the Council's conduct, the Court of Appeal considered in Bostik Australia Pty Ltd v Liddiard (No 2), supra, at [29]: "The requirement that a party's conduct is relevant to determining whether a Sanderson order should be made is not a requirement that the party engage in misconduct. Rather, it is whether, given its conduct, it is fair to impose such an order on it." 81The issue as to the conduct of the unsuccessful defendant (in these proceedings, the Council) is a matter, as discussed above, that is material in determining whether to make a Bullock or Sanderson order was considered by Priestley JA and Santow AJA (as his Honour then was) in Almeida v Universal Dye Works Pty Ltd (No 2) [2001] NSWCA 156. The considerations in that case are instructive. 82The analyses in that case focused upon observations made in Sved v Council of the Municipality of Woollahra (1998) NSW Conv R 55-842 at 56,605. In that case, Giles J (as his Honour then was) observed that: "... the conduct of the unsuccessful defendant must have been such as to make it fair to impose some liability on it for the costs of the successful defendant, or that the conduct of the unsuccessful defendant must show that the joinder of the successful defendant was reasonable and proper to ensure recovery of the damages sought." (emphasis added) 83His Honour also observed: "...The difference in formulations is probably more apparent than real, as reasonableness as between the plaintiff and the unsuccessful defendant will normally be demonstrated by some conduct of the unsuccessful defendant which made it proper that the successful defendant be joined or that the unsuccessful defendant should bear the costs of the successful defendant. Such conduct was found in Lackersteen v Jones (No 2) in the successful defendant denying the authority of its agent whereby the plaintiff joined the agent who became the successful defendant ..." 84In Almeida v Universal Dye Works Pty Ltd (No 2), Priestley JA examined the question of "conduct" that is relevant to the making of a Bullock or Sanderson order. His Honour took a broad view and stated: "... In my view any conduct by the defendant or state of affairs in which the defendant is an integral part which makes it fair and reasonable for other parties to be joined as defendants will be relevant to deciding on fair costs orders ..." (at [8]) 85In that case it was noted that the plaintiff faced the task of proving who had been the occupier of the factory roof in question, either in an undefined sense or in a statutory sense. There was doubt as to the identity of the occupier and hence additional parties were joined. Priestley JA further observed: "... the questions of occupation and whether Universal was the head contractor were put in issue by Universal. This alone would in my opinion have been sufficient conduct on the part of Universal to warrant the making of the orders against it which Mrs Almeida now seeks." (at [13]) 86In his judgment, Santow AJA observed: "[32] In order for a Bullock order to be made in favour of a plaintiff against an unsuccessful defendant, the conduct of that defendant must have been such as to make it fair, as between plaintiff and unsuccessful defendant, to impose some liability on it for the costs of the successful defendant; see Gould v Vaggelas (1984) 157 CLR 215 per Gibbs CJ at 565-6. Brennan J (at 579) formulated the test in these terms: 'the conduct of the unsuccessful defendant in relation to the plaintiff's claim against him showed that the joinder of the successful defendant was reasonable and proper to ensure recovery of the damages sought'. This formulation requires not only fairness in the sense of what is proper, but also reasonableness. It focuses on the joinder of the successful defendant. [33] However, I do not understand that focus on joinder excludes from consideration relevant conduct pre-dating joinder. This is so long as that conduct is relevant to the fairness, or reasonableness, of making a cost order against the unsuccessful defendant. [34] Thus both judgments make clear that it is not enough for the plaintiff to show in the abstract that such an order be reasonable and proper. There must also be some sufficient element in the conduct of the unsuccessful defendant which makes it reasonable and proper to join the successful defendant (Brennan J) or fair for such a cost order to be made against the unsuccessful defendant (Gibbs CJ). [35] That conduct of the unsuccessful defendant must be 'in relation to the plaintiff's claim against him' (per Brennan J in Gould v Vaggelas (supra) at 579). From that proposition one would expect the conduct ordinarily to relate to the way the unsuccessful defendant conducted its defence, taking account of any claim between the defendants inter se." 87Later in his judgment, his Honour stated that he would not agree that "conduct" in the sense used by Giles J in Sved v Council of the Municipality of Woollahra has as narrow an ambit as was contended for in that case by Universal. Santow AJA stated that he would consider it relevant in that regard that the unsuccessful defendant's conduct in denying that it was the head contractor would encourage a rational plaintiff, it was observed, to sue the other respondents: at [38]. 88Finally, his Honour observed at [39], that he would differentiate "conduct" from a purely passive state of affairs where the latter merely provides context for appraising any actual conduct that bears on fairness. His Honour observed" "...In making that distinction, I would acknowledge that conduct can include deliberate acts of omission, so that the distinction between conduct and context is not always clear-cut." 89Accordingly, in Almeida v Universal Dye Works Pty Ltd (No 2), the conduct of the first respondent in denying that it was the head contractor was such as to justify the Bullock order sought by the appellant once considered in the factual context that arose in that case. 90I now turn to the evidence relevant to the application for the Bullock or Sanderson order in the present proceedings. 91Mr Walsh, solicitor for the plaintiff, swore an affidavit on 21 November 2013 which was, in part, evidence relied upon in support of a Bullock order against the Council. Mr Walsh relied upon matters contained within his earlier affidavit sworn on 26 October 2010 in respect of the Notice of Motion seeking to join the Club to the proceedings. 92It is unnecessary here to set out all of the matters which Mr Walsh refers in his later affidavit in paragraphs [7]-[23]. I have, of course, closely considered those paragraphs. Mr Walsh referred to evidentiary statements of James Garcia, a cleaner that had been employed as a contractor by the Club as well as an evidentiary statement of the General Manager of the Club, Keith Langelaar. Mr Walsh stated that none of those statements mentioned what he refers to as "any rationale about when and why the gate was to be opened": at [9]. 93Mr Walsh additionally referred to a statement of Mr Pintara Lay dated 22 October 2010 which was served by the Council: at [11]. 94In paragraphs [12] and [13] of Mr Walsh's later affidavit the issue as to whether or not there had been delegation by the Council to the Club was addressed in terms as to whether or not interpretation of Mr Lay's evidentiary statement as to the opening and closing of the gate across a local or public road was to be understood or interpreted as indicating that there had been an inadequate delegation of the Council's function in respect of the care, control and management of the road or whether or not it was open to the "interpretation" that there had been an effective delegation such that any negligence in the operation of the boom gate lay with the Club. 95Mr Walsh stated at [13] of his later affidavit that he adhered to his state of belief that it was possible that the Club was instructed in the manner that constituted a more formal delegation as to why the gates needed to be opened and closed at certain times and that it embraced that responsibility. Documentation on such matters, it was said, fell within paragraph [5] of the subpoena that had been served on the Council but that, to the best of his knowledge and belief, no documents as sought in that paragraph had been produced as to the issue to which he referred. 96Mr Walsh then stated at [17] of his later affidavit that he maintained the view he expressed in his affidavit of 26 October 2010 that there was a real issue as to whether the Council had effectively delegated to the Club the opening and closing of the boom gate and that he adhered to his "stated belief". 97He also referred to evidence concerning the operation of the gate, including, in particular, Mr Lay's evidence which Mr Walsh said confirmed his belief that the Council had maintained that it delegated the operation of the gate: at [20]-[21]. 98Finally, Mr Walsh relied upon what he said was his understanding that, as to the issue of the delegation of the opening and closing of the boom gate, it had been disputed by the Council. 99I have earlier referred to the affidavit evidence of Mr MacLennan, solicitor for the Council, affirmed on 1 November 2010 and relied upon by the Council in opposing the application to join the Club to the proceedings. At paragraph [11], Mr MacLennan stated: "Rockdale City Council opposes the joinder of St George Sailing Club for two reasons: (a)First, the plaintiff's claim against the Club is so weak as to not to warrant the joinder; (b)Second, such a joinder would jeopardise the hearing date and essentially delay any later one allocated with the St George Sailing Club as a party." 100In paragraph [53], Mr MacLennan stated in relation to his statement in paragraph 11, that he based that statement on two matters: "(a) First, as solicitor for Rockdale, I investigated the potential involvement of other parties, so that cross-claims seeking contribution could be considered. I investigated the role of St George Sailing Club, and formed the opinion (apparently similar to the opinion of the plaintiff's original Senior Council) that it is extremely unlikely that the Club could be found liable for the plaintiff's accident. (b) Second, I draw the court's attention to the way in which the plaintiff proposes to plead his case against St George Sailing Club. The only basis for a claim against the Club is that it had "the care, control and management" and "responsibility for the opening and closing" of the gate. I do not believe that these allegations can provide the basis for a successful claim. The "negligence" particularised seems to bear out the difficulty in pleading a realistic claim against the Club." 101The issue as to whether there had been an effective delegation by the Council was, as earlier noted, addressed in the Council's Submissions on Costs at [7] and [8]. In the latter paragraph it was stated that there was no evidence to support the first assertion, namely, that the Council had actively informed the plaintiff or his representatives that there had been a delegation, whether formal or informal, of the authority to operate the gate to the Club. The Council maintains on the present application that there was no evidence to support that assertion and that Mr Walsh did not refer in his affidavits to such correspondence. In that respect reliance was placed upon Ms Morgan's affidavit at [3]. 102I have endeavoured to identify any "conduct" by the Council that would justify, that is to say, would properly support, an exercise of the discretion to make a Bullock or Sanderson order. I have considered the evidence to determine whether there was any active conduct or relevant failure to inform the plaintiff's solicitors on a matter that could be said to have operated or induced or left the plaintiff with no alternative but to join the Club. Such an inquiry is one to be made against the background and in the context of relevant matters including the question of a possible delegation, formal or otherwise, of functions or responsibilities by the Council to the Club. 103I have concluded that there is no basis for a finding that there was relevant conduct by the Council such as to make it fair to impose some liability on it for the costs of the successful defendant, the Club. I do not consider that the Council's conduct could be said to have induced or misled the plaintiff or his advisors on the issue of delegation, or no delegation, or upon any other issue material to the joinder of the Club. As the authorities make plain, these questions involve issues of reasonableness as between the plaintiff and the unsuccessful defendant. I am unable to discern any conduct by the Council that would make it reasonable for a Bullock or Sanderson order to be made against it and, accordingly, I decline to make such an order.
Orders 104Accordingly, I make the following orders: (1)The first defendant (the Council) is to pay the plaintiff's costs of the proceedings on the ordinary basis. (2)The plaintiff is to pay the second defendant's (the Club's) costs of the proceedings on the ordinary basis. (3)As between the first and second defendants, each party pay their own costs of the cross-claims.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 September 2014
Simmons
Rockdale City Council
[2005] VSCA 298
[1985] HCA 85
(1985) 157 CLR 215
(1988) 93 FLR 442
(2006) 67 NSWLR 706
(1990) 25 NSWLR 353
(1991) 25 NSWLR 358
(1984) 157 CLR 215